Horsehead retirees hit by health care hike

Monthly premium will rise to $372 from $128 for a single enrollee.

January 06, 2005|By Matt Birkbeck Of The Morning Call

A year after losing their paid health insurance, retirees of Horsehead Corp. enrolled in the company's group health plan will be socked with major increases in premiums for 2005, rising in most cases by nearly 300 percent.

In letters sent to nearly 500 retirees, many living in the Palmerton area, Horsehead Corp. announced that the new monthly rate for a single, Medicare-eligible supplement with no drug coverage would rise to $372 from $128 on Feb. 1.

Comprehensive family coverage, now $1,319 per month, also was increased, but Horsehead Vice President Ali Alavi could not say by how much.

Stephanie Cawley, director of Carbon County Area Agency on Aging, said her Palmerton office has been overwhelmed by retirees unable to afford the new premium and unsure of what to do.

"They're shocked," Cawley said. "That cost is high. Some even thought it was an error."

Cawley said her office is advising retirees on other less costly alternatives, directing them to other health providers.

"We have a lot of people coming in for benefits counseling," she said.

Many of the retirees live on pensions that range from $500 to $600 per month. Add in their Social Security checks, and their monthly incomes average between $1,300 and $1,500.

Spousal health insurance coverage is available under the Horsehead plan, but at the same new rate, which would cost a retiree and a spouse $744 per month, roughly half the retiree's income.

Alavi blamed the increases on inflation and underestimating the cost of the insurance.

"The cost of health care has gone up by 12 percent, at a minimum," he said. "Last year the costs of the program were much higher than expected, around $1 million, and it's not a cost the company can underwrite."

The retirees lost their free health and life insurance as part of an agreement that took the company out of bankruptcy in December 2003. Retirees were allowed to keep their insurance as long as they paid the entire premium.

Alavi said about 1,000 retirees from six Horsehead subsidiaries in seven states agreed to remain in the plan, including hundreds from the Palmerton area who worked at the Horsehead zinc plant, formerly known as the New Jersey Zinc plant.

By December, Alavi said, fewer than 500 retirees were enrolled in the plan, administered by Highmark Blue Cross/Blue Shield in western Pennsylvania.

A Highmark spokesman declined to comment, saying he needed to look into the matter.